How Much Should I Spend on An Engagement Ring?

by Sean Bryant on May 18, 2012

Planning a wedding can easily be one of the most stressful times in a couples life. Sometimes it doesn’t even compare to the stress and pressure that a groom to be feels when picking out the engagement ring. Many factors go into the perfect ring. He has to think about what cut of diamond to buy, how big the ring should be, the clarity of the diamond and (oh yeah) there’s the whole can he actually afford it dilemma.

How Much Should I Spend on an Engagement Ring?

When I was looking to buy an engagement ring for my wife I had a pretty good idea of the ideal ring. I knew I wanted to get her a princess cut diamond with few imperfections and I wanted it to be around 1 carat in size. I had always heard that you were supposed to spend around two months worth of your salary on the ring. Is this the right amount? I don’t think there really is a right or wrong amount that you need to spend on an engagement ring. I think it needs to be something you can afford and still feel financially comfortable.

In a CNN Money article, they stated that the average price for an engagement ring was $2,600. Depending on the quality of the diamond this could equal out to a small or large diamond. There are several varying factors that can effect the price of the ring.

Types of Inclusions – If you buy a ring that is flawless, you are going to be paying a premium for it. When I purchased my wife’s engagement ring I bought hers with a few inclusions. These are not visible to the naked eye, however, they can reduce the price considerably.

Size – When you are deciding how big of a ring to purchase always select just below. If you are looking to buy an engagement ring around one carat than look to purchase something something between 0.95 and 0.99. You will end up saving a lot of money compared to purchasing a 1.0 carat ring.

Color – Color is a pretty important factor for a diamond ring. If you buy a diamond that is near colorless than you can help offset any inclusions that it might have. Colorless diamonds sparkle and every woman loves a diamond that sparkles.

At the end of the day, when you are looking to buy an engagement ring you need to buy one that you feel comfortable with financially. No matter what size it is or what color it is, she is going to love it because it comes from you.

If you are curious about other ways to save money on a diamond ring you can read this diamond guide.

How did you measure how much to spend on your wife/fiances engagement ring? Did you follow the two month salary rule?

Sean Bryant

Sean Bryant created OneSmartDollar.com in 2011 to help pass along his knowledge of finance and economics to others. After graduating from the University of Iowa with a degree in economics he worked as a construction superintendent before jumping into the world of finance. Sean has worked on the trade desk for a commodities brokerage firm, he was a project manager for an investment research company and was a CDO analyst at a big bank. That being said he brings a good understanding of the finance field to the One Smart Dollar community. When not working Sean and he wife are avid world travelers. He enjoys spending time with his daughter Colette and dog Charlie.

I heard it was supposed to be three months salary… of course, I might have heard that on a diamond commercial…. Are you sure she wants a diamond? I know some women want a different stone as the centerpiece. But to get to the major question of the post… I think you should spend what you can afford to, your love and all that should be greater than a piece of jewelry.

Yeah the 2 month salary rule sounds pretty standard. It is interesting how long that rule has been around though. It would be nice if this eventually got scaled down to a lower price and more focus was placed on financially security of the couple going forward.

I like your tip about going just below the carat size you’re looking for, that’s a good idea. It’s basically the same thing, but saves you some good money. I heard it was a 3 month salary rule, but honestly either way that seems like a lot of money. If my sister’s husband followed that rule for her engagement ring, it would have been more than $10,000. That sounds outrageous. So I agree with you, it’s just what anyone can afford and wants to pay, in the end.

My husband spent about 2 months salary, but I don’t think he intended it that way. He spent about 2k$ on the diamond and another 2k$ on the custom setting. We really just paid what we needed to for what we wanted. He paid for it in cash while meeting lots of other financial goals though, so it was all good.

I think it also depends on how important the diamond is to lady. Personally, I knew my engagement ring would probably be the most important and nice piece of jewellery I would ever get, so the diamond was pretty important. Also, depending on if the surprise of what the ring looks like is really important, I know lots of people who shop with their girlfriend for the ring, myself included. That way my fiance didn’t have to stress out about what ring to get me, and I got to enjoy the ring shopping experience 🙂

The whole process of getting married is an insane waste of money. $20k – $50k just to say I do. It is ridiculous. How about taking that money and investing it in something instead. If this route was followed, I bet the divorce rate would be a lot lower in this country because many marriages end over money problems.

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